What's in This Issue - Summer 2017

August 15, 2017

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Most CFOs and tax directors are familiar with the concept of nexus in the context of state tax. However, according to EisnerAmper SALT Partner-in-Charge, Gary Bingel, many people remain confused by the somewhat conflicting jurisprudence surrounding the topic and are often surprised by how easily states can assert a nexus claim against a business based on seemingly minor, or even inadvertent, activity by the business.

In this issue of Business Tax Quarterly, we take a high-level look at three key areas greatly impacting businesses that have multistate operations.

First, we examine the current state of the law on nexus and point out some of the traps for the unwary that businesses should anticipate – particularly in the fast-paced, increasingly electronic-based business world.

Second, we review the potential shape of things to come in the nexus arena. This includes the states’ increasing use of bright-line or economic nexus thresholds that are aimed at businesses having a relatively low threshold of sales in the state, including businesses that have no demonstrable physical presence, such as property or employees. This is a trend that seems likely to continue at the state level.

Third, we analyze proposed legislation at the federal level that seeks to codify a physical presence standard for purposes of state tax nexus. The bills introduced in Congress have been criticized by states as imposing unfair restrictions on their ability to expand their tax bases through the use of concepts such as economic and click-through nexus.

Businesses need to monitor the progress of these bills as well as the status of the nexus fight at the state level, both in state legislatures and in the courts.

EisnerAmper LLP is among the nation’s largest full-service advisory and accounting firms. We provide audit, accounting, and tax services, as well as a complete suite of professional advisory services to a broad range of clients across many industries. We work with businesses of all sizes, including more than 200 public companies, as well as with high net worth individuals and family offices. We serve thousands of financial entities spanning the hedge, private equity and venture fund space, along with broker dealers and insurance companies. As companies grow we help them reach their goals every step of the way.